Auto Sector To Compromise Production Amid Import Curbs

Web Desk — The State Bank of Pakistan (SBP) has introduced a mechanism for requiring prior approval for the import of goods, which has hampered the arrival of completely knocked down (CKD) kits of vehicles and major imports in the auto industry.

In the next week, the delay in processing approvals for CKD kits import transactions will lead to a production freeze for all major assemblers in addition to disrupting the entire supply chain including local vendors and dealers, and leading to job losses for contract and daily wage workers.

Abdul Waheed Khan, director-general of Pakistan Automotive Manufacturers Association (PAMA), informed SBP Governor Dr Murtaza Syed on Friday that the delay in payments creates a huge business risk for exporters of goods to Pakistan, which will adversely affect the auto industry in the long term.

HS code 8703 category CKD for motor vehicle imports is insignificant in terms of foreign payments. This measure seems to have delayed weekly foreign payments of a maximum of $25 million. However, any further delay may result in a hit of $80m to the economy and a loss of $30m to the national exchequer every week along with creating unemployment.